Category Archives: Macroeconomics

Mantra: Interest Rates Have to Rise, Interest Rates Have to…

I thought of structuring this post like a fictional story, but I couldn’t figure out how to make it good enough for publication.  Well, truth is often stranger than fiction, so have a look at this Bloomberg article pointing at a 37% loss in the ProShares UltraShort 20+ Year Treasury (TBT). A few points to start […]

Numerator vs Denominator

Every now and then, a piece of good news gets announced, and then something puzzling happens.  Example: the GDP report comes out stronger than expected, and the stock market falls.  People scratch their heads and say, “Huh?” A friend of mine who I haven’t heard from in a while, Howard Simons, astutely would comment something […]

When Will the FOMC Tighten the Fed Funds Rate?

There are several ways to gauge the Federal Open Market Committee wrong. I am often guilty of a few of those, though I hope I am getting better.  Don’t assume the FOMC: Shares your view of how economies work. Cares about the politics of the situation. Knows what it really wants, aside from magic. Won’t change […]

Volatility Can Be Risk, At Rare Times

There is a saying in the markets that volatility is not risk. In general this is true, and helps to explain why measures like beta and standard deviation of returns do not measure risk, and are not priced by the market. After all, risk is the probability of losing money, and the severity thereof. It’s […]

Redacted Version of the September 2014 FOMC Statement

July 2014 September 2014 Comments Information received since the Federal Open Market Committee met in June indicates that growth in economic activity rebounded in the second quarter. Information received since the Federal Open Market Committee met in July suggests that economic activity is expanding at a moderate pace. This is another overestimate by the FOMC. […]

The Victors Write the History Books, Even in Finance

    “It ain’t what you don’t know that hurts you, it’s what you know that ain’t so.” (Attributed to Mark Twain, Will Rogers, Satchel Paige, Charles Farrar Browne, Josh Billings, and a number of others) A lot of what passes for investment knowledge is history-dependent, and may not serve us well in the future.  Further, a certain […]

On Research Sources and Trading Rules

  On a letter from a reader: In your Industry Ranks August 2014 post you mentioned that you use Value Line analytic tools. If it is not a secret, what other third-party research and analysis do you use, especially for company analysis (MorningStar, Zacks…)? Do you rely/subscribed on Interactive Brokers “IBIS Research Essentials?” If yes, […]